Demand for Money MCQs

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The price purchasing power of money is defined as






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Real balances are defined as






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The relevant variables in the demand for money function are






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A _______ in consumption and a _________ in the opportunity costs of holding money will lead to an increase in the demand for money.






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A rise in expected inflation will lead people to _________ their holdings of money.






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If a person is suffering from money illusion when prices increase by 5% then he or she also believes that






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Assuming a constant rate of spending and a balance of $ at the end of the month, the Tobin-Baumol optimal cash management model predicts that an indiv...






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According to the Tobin-Baumol model, if an individual’s monthly nominal income is $4,000, but he is paid on a two-week basis, then his average amoun...






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According to the Tobin-Baumol model, if an individual’s monthly nominal income is $4,000 with half that amount going to pay down is credit card bill...






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Determining the optimal level of cash holdings for, individuals will help in studying how






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From the information in number 7, if the monthly interest rate is 1%, what is the amount of interest lost by holding money in the form of cash given 5...






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From number 11, what is the value of the interest foregone if the individual decides to make one additional transaction a month?






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What is the marginal cost of holding money in number 12)?






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From 12), what is the optimal number of transactions?






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What is the optimal demand for money from 12?






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According to the Baumol-Tobin model, higher inflation will ________ the cost of holding idle cash and increase the number of trips to the bank will __...






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According to the Quantity Theory of money, if the stock of money is $1,000 billion in the year 2000, the velocity of money is equal to 6, and the pric...






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Which of the following is not a Baumol-Tobin model of the demand for money?






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The velocity of circulation can be defined as






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Md= the quantity demanded of money, Ms=the quantity of money in circulation, V=the velocity of circulation, P= the price level, Y= the nominal GNP, an...